Merger and Acquisitions (Tables)

3 Months Ended

Mar. 31, 2023

Business Combinations [Abstract]

Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date using Level 3 inputs. A final determination of the allocation of the purchase price to assets acquired and liabilities assumed has not been made and the following should be considered preliminary. Adjustments to the preliminary purchase price allocation could be material. The final determination is subject to completion of the Company's valuation of the assets acquired and liabilities assumed, including contingent liabilities and deferred income taxes, which it expects to complete within one year of the acquisition date.

(Unaudited, U.S. Dollars, in thousands, except shares and price per share)	As of January 5, 2023		Assigned Useful Life
Assets acquired:
Current assets
Cash and cash equivalents	$	29,419
Accounts receivable, net		35,313
Inventories		129,610
Prepaid expenses and other current assets		4,600
Total current assets		198,942
Property, plant, and equipment, net		68,911
Customer relationships		27,100	13 years
Developed technology		45,400	6 - 8 years
In-process research and development ("IPR&D")		5,600	Indefinite
Other long-term assets		20,472
Total identifiable assets acquired	$	366,425
Liabilities assumed:
Current liabilities
Accounts payable	$	21,602
Other current liabilities		41,224
Total current liabilities		62,826
Long-term borrowings under SeaSpine credit facility		26,298
Other long-term liabilities		31,950
Total liabilities assumed		121,074
Net identifiable assets acquired	$	245,351
Total fair value of consideration transferred		376,745
Residual goodwill	$	131,394

Schedule of Estimated Fair Value of Consideration Associated with Merger

The total estimated fair value of consideration associated with the Merger as of the acquisition date was comprised of:

(Unaudited, U.S. Dollars, in thousands, except shares and price per share)
Share Consideration:
Orthofix common shares to be issued in exchange for SeaSpine common shares		16,047,315
Orthofix closing price per share as of January 4, 2023	$	22.76
Estimated fair value of shares issued in exchange for SeaSpine common shares	$	365,237
Estimated fair value of Orthofix stock options and RSUs issued in exchange for outstanding SeaSpine equity awards	$	11,508
Total estimated fair value of consideration	$	376,745

Summary of Pro Forma Financial Information

The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if Merger closed as of January 1, 2022.

	Three Months Ended March 31,
(Unaudited, U.S. Dollars, except per share data)	2023	2022
Net sales	$175.2 million	$157.1 million
Net loss	($45.2) million	($42.6) million

Summary of Integration Costs Incurred

The following table summarizes integration costs incurred for the three months ended March 31, 2023, and 2022, respectively.

	Three Months Ended March 31,
(Unaudited, U.S. Dollars, in millions)	2023		2022
Compensation-related integration costs		10.3	$	—
Fee paid to financial advisor to the Merger		5.5		—
Professional fees / consulting fees		4.2		—
Product rationalization charges		0.7		—
Other costs to complete		1.6		—
Total		22.3	$	—

Summary of Restructuring Costs

The table below provides a summary of restructuring costs incurred during the quarter and the resulting liability as of March 31, 2023, which is recognized within other current liabilities:

(Unaudited, U.S. Dollars, in millions)	Balance as of December 31, 2022		Charges Incurred		Payments Made			Balance as of March 31, 2023
Severance costs	$	—	$	8.6	$	(1.0	)	$	7.6
Retention costs		—		1.3		—			1.3
Payroll taxes		—		0.3		—			0.3
Total	$	—	$	10.2	$	(1.0	)	$	9.2